Asian shares slip from 3-week high as oil rally pauses

Asian shares slipped from near three-week highs hit earlier this month on Friday, as a rally in oil prices paused and investors remained cautious about the outlook of the global economy.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2% while Japan's Nikkei dropped 1.5%.

MSCI's emerging market index hit a six-week overnight on signs of stabilisation in oil prices, but US shares dipped, with S&P 500 shedding 0.5%, dragged down by lacklustre earnings from Walmart Stores.

Oil prices dipped on Thursday following a rise in US stockpiles but look set to post their first gains in three weeks after the battered market took heart from a tentative deal by major producers to freeze output at January's highs.

Brent crude settled down 0.6% at $34.28 per barrel on Thursday.

US crude last traded at $30.56, off a two-week high of $31.98 hit on Thursday but up 3.8% so far this week.

Still, there are doubts about how much other countries will cooperate, with a focus on Iran, which has pledged to increase output sharply to regain market share lost during sanctions.

"I would assume oil prices will face downward pressure and there will be selling into a rally," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

In a sign that investor fears over a global economic slowdown are far from being on the wane, traditional safe-haven assets held firm after a strong outperformance on Thursday.

Gold surged 1.8% on Thursday to $1,230.90 per ounce and last stood at $1,231.00.

Investors also flocked to the safety of top-rated government bonds, with the 10-year US Treasuries yield falling back to 1.738%, down more than 10 basis points from Wednesday's one-week high of 1.8470%.

In the currency market, the yen regained its edge, rising to 113.25 per dollar from this week's low of 114.875.

The euro fell to as low as 125.595 yen on Thursday a low last seen in June 2013, and last traded at 125.70 yen.

Against the dollar, the common currency traded at $1.1112, having slipped to a two-week low of $1.1071 on Thursday.

The minutes from the European Central Bank's January meeting showed some policymakers are advocating the need to act pre-emptively in the face of new threats on the economy.

A big focus is on the British pound and the EU summit in Brussels, where Prime Minister David Cameron is seeking more favourable terms for its EU membership.

A successful deal there is expected to lead to a referendum on EU membership as soon as in June.

"We expect a correction lower in EURGBP should an agreement be reached at the meeting, although an impasse, to which we assign a non-negligible probability, would likely weigh on the GBP," wrote Barclays analysts in a report.

The pound stood at $1.4330, having fallen to a near seven-year low of $1.4080 last month partly on worries about so-called "Brexit".

Against the euro, it stood at 77.52 pence per euro.